BILL NUMBER: SB 559 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JULY 7, 1999
INTRODUCED BY Senator Brulte
FEBRUARY 19, 1999
An act to add Section 511.1 to the Business and Professions Code,
to add Section 1395.6 to the Health and Safety Code, to add Sections
10178.3 and 11580.03 to the Insurance Code, and to add Section 4609
to the Labor Code, relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
SB 559, as amended, Brulte. Health care providers: preferred
rates.
Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the licensure and regulation of health care service
plans by the Department of Corporations. Under existing law, a
willful violation of health care service plan requirements is a
crime. Existing law also provides for the regulation of insurers by
the Department of Insurance.
This bill would provide that a payor, as defined, is not entitled
to claim or pay a preferred rate for health care services provided by
health care providers to beneficiaries, unless the payor is a
qualified payor meeting certain conditions. This bill would define
"payor" to include a health care service plan, a specialized health
care service plan, a disability or liability insurer that provides
coverage for hospital, medical, or surgical expenses, a workers'
compensation insurer, an employer, or any other 3rd party that is
responsible to pay for health care services provided to beneficiaries
by health care providers. This bill would enact other related
provisions.
Because a willful violation of the bill's requirements with
respect to health care service plans would be a crime, this bill
would impose a state-mandated local program by creating a new crime.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 511.1 is added to the Business and Professions
Code, to read:
511.1. (a) As used in this section, the following terms have the
following meanings:
(1) "Beneficiary" means an individual who receives health care
services from a provider, which services are paid for by a payor.
(2) "Contracting agent" means an individual or entity that, for
monetary or other consideration, sells, leases, assigns, transfers,
or otherwise conveys or arranges the availability of a provider or
provider panel to provide health care services to beneficiaries. A
contracting agent may include, but is not limited to, a health care
service plan, a specialized health care service plan, a third-party
administrator, a preferred provider organization, an independent
practice association, or a medical group.
(3) "Eligible beneficiary" means a beneficiary whose care is being
paid for by a qualified payor pursuant to a program that provides
direct financial incentives to the eligible beneficiary for utilizing
a provider or provider panel, and who is able to present, at the
time of service, a current identification card issued by the payor,
or is otherwise able to reasonably demonstrate, at the time of
service, current eligibility to receive health care service at the
preferred rate. "Financial incentives" means reduced copayments,
reduced deductibles, or premium discounts directly attributable to
the use of a provider panel.
(4) "Payor" means a health care service plan, a specialized health
care service plan, a disability or liability insurer that provides
coverage for hospital, medical, or surgical expenses, a workers'
compensation insurer, an employer, or any other third party that is
responsible to pay for health care services provided to
beneficiaries.
(5) "Payor summary" means a written summary that includes, but is
not limited to, all of the following:
(A) The payor's name.
(B) The type of plan, including, but not limited to, a group
health plan, an automobile insurance plan, and a workers'
compensation plan.
(C) The type of payor, including, but not limited to, a health
care service plan, a specialized health care service plan, a
disability, liability, or workers' compensation insurer, or a
self-insured employer.
(D) The financial incentives, if any, to beneficiaries to seek
care from a provider panel.
(E) The type of coverage, including, but not limited to,
chiropractic, hospitalization, medical, dental, and vision coverage.
(F) The method by which to identify eligible beneficiaries.
(G) The method by which to verify eligibility, authorization
requirements and procedures, copayment requirements, and claim
submission requirements and procedures.
(6) "Preferred rate" means the rate at which a provider has agreed
to provide services to eligible beneficiaries and to other
beneficiaries under the conditions specified in this section.
(7) "Preferred rate agreement" means a written agreement between a
provider and a contracting agent or a payor that clearly states the
preferred rate and includes a payor summary for each payor entitled
to pay the preferred rate or clearly describes the types of payors
and applicable conditions under which a contracting agent may offer
or extend the preferred rate to a payor or other contracting agent.
(8) "Provider" means any of the following:
(A) Any person licensed or certified pursuant to this division.
(B) Any person licensed pursuant to the Osteopathic Initiative
Act.
(C) Any person licensed pursuant to the Chiropractic Initiative
Act.
(D) Any person licensed pursuant to Chapter 2.5 (commencing with
Section 1440) of Division 2 of the Health and Safety Code.
(E) A clinic, health dispensary, or health facility licensed
pursuant to Division 2 (commencing with Section 1200) of the Health
and Safety Code.
(F) Any entity exempt from licensure pursuant to Section 1206 of
the Health and Safety Code.
(9) "Provider panel" means a group of providers, each of whom has
entered into a preferred rate agreement with a contracting agent,
which agreement permits the contracting agent to commit a provider or
a provider panel to the provision of health care services to
eligible beneficiaries pursuant to a preferred rate, and to other
beneficiaries under conditions set forth in this section.
(10) "Qualified payor" means any either
of the following:
(A) A payor who is entitled to pay a preferred rate for a provider'
s services by virtue of meeting all of the following conditions:
(i) The payor has entered into either a preferred rate agreement
with the provider, or the payor has entered into a written agreement
with a contracting agent, which written agreement clearly discloses
the parties to the preferred rate agreement, and which directly or
indirectly qualifies the payor to receive the preferred rate.
(ii) The preferred rate shall apply only to claims for eligible
beneficiaries.
(iii) The preferred rate shall only apply prospectively to
services rendered after the effective date of the written agreement
described in clause (i).
(iv) The payor provides an explanation of benefits that identifies
the specific preferred rate agreement whereby the payor is entitled,
directly or indirectly, to pay a preferred rate for the services
rendered.
(B) A payor who has been specifically authorized, by a written
agreement signed by a provider who has received a payor summary, to
pay the provider's preferred rate for services to the payor's
beneficiaries. The preferred rate in this case shall apply only
prospectively to services rendered after the effective date of the
written agreement and only if the payor provides an explanation of
benefits that identifies the specific preferred rate agreement
whereby the payor is entitled, directly or indirectly, to pay a
preferred rate for the services rendered.
(C) A payor who is entitled to pay a preferred rate for a provider'
s services by virtue of meeting all of the following conditions:
(i) The payor, either directly or indirectly through a contracting
agent, has given the provider from whom the payor wishes to apply a
preferred rate, all of the following: a payor summary, written notice
of the payor's intent to apply the providers' preferred rate, and a
period of 30 days for the provider to decline to participate in any
proposed agreement.
(ii) The preferred rate shall apply only prospectively to services
rendered after the expiration of the period described in clause (i).
(iii) The payor provides an explanation of benefits that
identifies the specific preferred rate agreement whereby the payor is
entitled, directly or indirectly, to pay a preferred rate for the
services rendered.
(b) No payor shall be entitled to claim or pay a preferred rate
for health care services to beneficiaries, unless the payor is a
qualified payor.
(c) A contracting agent shall disclose, within 30 days of receipt
of a written request from a provider or a provider panel, the payor
summary of each payor with whom it has directly contracted, or the
name, address, telephone number, and contract
contact name of each contracting agent with whom it has
directly contracted.
(d) A contracting agent shall not terminate, limit, nonrenew, or
otherwise impair any existing contract or employment of a provider,
or the participation of a provider on a provider panel on the basis
that the provider refuses to contract with additional payors pursuant
to the provisions subparagraph (B) or (C) of
subparagraph (B) of paragraph (10) of subdivision (a).
(e) A payor who has not complied with the conditions of
subparagraph (A) , (B), or (C) or (B)
of paragraph (10) of subdivision (a) shall pay the provider's
standard nondiscounted reasonable charges for services rendered to
beneficiaries. A payor shall reasonably demonstrate that it is
entitled to pay a preferred rate by virtue of being a qualified payor
within 30 days of receipt of a written request from a provider. The
failure of a payor to reasonably and timely demonstrate that it is
entitled to pay a preferred rate shall render the payor liable for
the provider's standard nondiscounted reasonable charges,
which charges amount the provider would have been
entitled to be paid absent any preferred rate agreement, which amount
shall be due and payable within 10 days of receipt of written
notice from the provider that a payor has not reasonably and timely
demonstrated its entitlement to a preferred rate.
(f) If a provider is required to take legal action to collect its
standard reasonable charges based on the requirements of this
section , it shall be entitled to the greater of five hundred
dollars ($500) or an amount that is twice the provider's
standard reasonable charges amount the provider would
have been entitled to be paid absent any preferred rate agreement
, in addition to reasonable attorney's fees and costs.
(g) Nothing in this section is intended to interfere with a payor'
s right to establish or determine eligibility or coverage of a
beneficiary.
SEC. 2. Section 1395.6 is added to the Health and Safety Code, to
read:
1395.6. A health care service plan or a specialized health care
service plan that is a payor, as defined in paragraph (4) of
subdivision (a) of Section 511.1 of the Business and Professions
Code, shall comply with the requirements of that section.
SEC. 3. Section 10178.3 is added to the Insurance Code, to read:
10178.3. A disability insurer that provides coverage for
hospital, medical, or surgical expenses and that is a payor, as
defined in paragraph (4) of subdivision (a) of Section 511.1 of the
Business and Professions Code, shall comply with the requirements of
that section.
SEC. 4. Section 11580.03 is added to the Insurance Code, to read:
11580.03. A liability insurer that provides coverage for
hospital, medical, or surgical expenses and that is a payor, as
defined in paragraph (4) of subdivision (a) of Section 511.1 of the
Business and Professions Code, shall comply with the requirements of
that section.
SEC. 5. Section 4609 is added to the Labor Code, to read:
4609. A workers' compensation insurer or a self-insured employer
that is a payor, as defined in paragraph (4) of subdivision (a) of
Section 511.1 of the Business and Professions Code, shall comply with
the requirements of that section.
SEC. 6. No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.